In episode 19 on the Wilson Wealth Management YouTube channel, we start our look at how you should assess potential financial advisors. There is such a wide range of technical skills, experience levels, and a multitude of professional designations amongst advisors. It can be difficult to find the right financial planner or other advisor to best meet your wealth management or investment needs.
One area requires assessing an advisor’s technical qualifications. We consider the following questions:
“What is a financial advisor? Is this different from a financial planner?”
A financial planner is a financial advisor. But not all financial advisors are planners. You need to determine what skill sets you require, then begin searching for professionals with relevant qualifications.
“There too many financial designations. How do I wade through the alphabet soup of advisor credentials?”
Yes, it is difficult. There are many different specializations, most with their own individual credentials.
If I require tax expertise, perhaps I seek out a CPA who has completed the in-depth tax program. If I require detailed investing advice, perhaps a CFA is best.
But even within an area, there are often many designations. In Canada, CPAs merged financial, managerial, and general accountants a few years ago. Now, when I meet a CPA, I need to ask for specifics on their training. Much different in skills whether the accountant was trained in audits and tax work as CAs. Versus if they have a cost accounting background by going the CMA route.
Or, Canadian financial planners. Technically, one does not require a professional designation to call themselves a “financial planner”. But there are actually three different certifications for financial planners who do pursue credentials. Certified (CFP), Registered (RFP), and Personal (PFP). Given the nature of financial planning, there really is no difference between the designations. Yet when you are assessing potential planners to hire, you will have three options to ponder. Four if you do not care about certifications.
“Does a credential equal competence? If so, why? If not, why should I care about letters after an advisor’s name?”
A credential does not guarantee competence. However, with so many available certifications out there, I would like to see my advisor have at least one. In the specific skills I require. If an advisor cannot be bothered to attain even one certification, how much effort will they take to ensure their skill set is strong.
And most members or professional organizations are required to take a certain number of education hours each year in order to retain the designation. That may provide some comfort that the advisor remains current in their expertise. Or not.
“Will any credentialed advisor meet my needs? Or do I need to dig deeper?”
You definitely need to dig deeper. We will discuss relevant experience in our next episode.
“What does it mean if an advisor is ‘in good standing’? Is this good or bad? What, if anything, does this tell me about them?”
If an advisor maintains a professional designation, you do want to ensure it is current.
Many professional organizations maintain databases that people can search to assess if an advisor is in “good standing”. If not, the advisor should be able to provide documentation to prove that there are no issues with the designation.
All that and more in episode 19. If you want to read a little more detail on assessing technical qualifications, please refer to, “Finding a Financial Advisor” and “Financial Advisor Qualifications”.
